In 1985, Rajnish Mehra and Edward C. Prescott, economists then at Columbia University and the University of Minnesota, published a paper pointing out a strange anomaly they dubbed “the equity premium puzzle.” Since the late 19th century, stock investments in America had generated returns that were 6 percent higher than what economists call “the risk-free rate—the yield on an investment for which there is virtually no risk of losing your principal. The low-risk investments, such as short-term U.S. government debt, had yielded less than 1 percent.Those “excess” stock-market returns, which include both price appreciation and dividends, are much higher than you would expect if they simply reflected the risk of losing your investment (don’t even get me started on the arcane procedures by which economists arrived at this conclusion). Moreover, this premium cannot simply be attributed to an underestimation of future corporate growth by investors. Even when expected dividend or corporate-earnings growth is taken into account, stock returns are higher than one would predict.

Mehra and Prescott’s paper coincided with the early stages of a long boom in equities that lasted from 1982 to 2000. In the years after its publication, people like Wharton’s Jeremy Siegel (and many less careful or measured imitators) wrote books touting the benefits of long-term stock investing. Americans jumped into the stock market, first tentatively, then eagerly, and finally almost hysterically. Convinced that equities offered an attractive risk-reward ratio, they began bidding up the price of stocks. Stock-price increases fueled expectations of further growth, until by 1999, a Securities Industry Association survey showed that investors expected to earn an annual rate of return of 30 percent. In other words, they expected that by 2010, stock prices would have skyrocketed.

Their actual return, of course, has mostly been negative. Over the past decade, equity investing hasn’t offered much of a premium. The market went up (the Dow hit another record high in the middle of the decade). But then it went down again. In finance terminology, we experienced a lot of volatility—the major indexes have fluctuated a lot—but not much real growth.

One possible explanation for this pattern is that the equity premium has eroded. Markets have grown more efficient over time, as more and better information—and the computer tools to analyze it—has become available. Meanwhile, the stock market has democratized. Modern diversified portfolios have reduced some of the risk of holding stocks, because even if a few companies fail, they won’t take your entire nest egg with them. Rather, the failures average out with the successes to produce a relatively steady rate of return. As defined-benefit plans—what your grandfather called a pension—have died off, people have poured their retirement savings into mutual funds that offer this sort of diversification. The deeper pool of money flowing into equity markets means that equities no longer need to offer a higher yield in order to attract money from bond and other securities markets.

The equity premium’s shrinkage may have another reason. Financial markets have an interesting feature that has undone many a trading strategy: once everyone starts believing something, it often stops being true. If you discover an arbitrage opportunity—otherwise known as a “price anomaly” or “free money”—it will be profitable only as long as few people know about it. Once it is widely known, bidders will rush into the market until the discrepancy is traded away. After that happens, future returns will be lower.

In other words, once everyone believes that the stock market offers high returns for relatively little risk, that notion stops being true. And everyone apparently does believe just that—even after the 2008 crisis, the price-to- earnings ratio of the S&P 500 remains near the top of its average historical range. Paradoxically, the current high price may be supported in part by a belief that the old equity premium still obtains. A survey done by ING Direct in March of this year found that, even after a decade of lousy returns and a spectacular market crash, more than a quarter of Americans expect annual returns in the stock market to average 10 to 20 percent.

If the return on equities really has fallen, this decline poses a big problem for the average investor who planned to stick 5 to 10 percent of his or her annual income into stock funds and retire comfortably. At an annual inflation-adjusted growth rate of 8 percent, savings of just 5 percent of your income for 30 years will leave you with a nest egg big enough to replace almost half your income when you retire. Saving 10 percent will make you really comfortable.

But if the return is 2 to 3 percent, you’ll need to save close to 40 percent to replace almost half of your income. And a 2 percent return seems to be a real possibility—in fact, it’s a hair above the 1.8 percent that Smithers & Co., an asset-allocation consultancy, forecast for U.S. equities over the next decade.

Felix Salmon, a finance blogger, argues that with stocks showing both lackluster prospects and whiplash-inducing price swings, investors might want to get out of the market entirely. That conclusion is tempting: if a quarter of Americans are expecting bubble-grade growth in stock prices, mightn’t another correction be in the offing?

But if we leave the market, where will we go? When confronted with the erratic performance of the equity market, many people start daydreaming of gold-plated corporate pensions, cushy civil-service jobs, or at least their Social Security benefits. But as it turns out, all of these dreams have drawbacks—and none of them escapes the tyranny of the equity market.

Start with private pension plans, which underpin nostalgic yarns about the golden age of the 1960s, when every man could raise a family on assembly-line wages and then retire in comfort. These pensions never were as widespread in fact as they are in popular legend—when the number of such plans peaked in the 1980s, they covered only about one-third of the workforce. And as it turned out, a lot of those plans failed catastrophically. Defined-benefit plans have a huge downside: they drastically discourage labor mobility. Not only do they make an economy less dynamic by tying workers to a given company, but they also leave the workers vulnerable if the company goes under, taking their retirement with it.

Private pensions are heavily regulated to protect workers. But regulation hasn’t stopped the plans from being underfunded, in part because the regulators, who worried that companies would use pensions as a slush fund to smooth their earnings, kept them from overcontributing in flusher times. Even before the latest financial crisis hit, the government-run pension insurer estimated that, on average, plans had less than 90 percent of the assets needed to meet their liabilities. Now those figures are much worse, and workers who have been depending on those pensions may see them slashed if their companies go under and the government takes over their plans.

Even that dire picture may be too optimistic. Allison Schrager, an economist who designs investment strategies for retirement accounts, recently wrote on The Economist’s Web site that for private pension funds, the equity premium “is often assumed to be between 5 percent to 8 percent. In my experience, risk managers go silent when asked where exactly this number comes from.” If the future equity premium turns out to be much lower than these fund managers are projecting, the funding gap may be too large for companies to make up—particularly since the gap tends to be largest in recessions, when companies are least able to find the money for extra contributions.

And yet the private plans are in good shape compared with state and local pension funds. For decades, politicians have promised lavish pension benefits in return for the support of the public-sector unions—promises that they, unlike their counterparts in the private sector, did not have to cover by setting aside a reasonably large asset base. Now the bills are coming due, and many funds are disastrously underfunded. The California state pension system, for example, has only 60 percent of the assets needed to pay its obligations through 2042. With a $19 billion budget deficit, the state is unlikely to be able to make up the shortfall unless the stock market starts zooming again.

California is perhaps the most extreme example, because its state tax revenues depend so heavily on the equity premium. When tech stocks boomed, so did incomes in the tech-heavy state; when they crashed, so did tax revenues. Just like private companies, the state systems were caught in a terrible bind—their revenues were squeezed just when they needed to find more money to shore up their pensions. But unlike private plans, these funds have no pension insurer, and while municipalities can negotiate partial payments in bankruptcy, there is no mechanism for state-operated funds to do so.

Not even the federal government is immune to the market’s gyrations. In the three years after the end of the tech boom, federal tax revenues plummeted from 20 percent of GDP to 16 percent. Many people blame the Bush tax cuts for the entire ensuing budget deficit, but in fact they accounted for less than half of the lost revenue. Most of the change from surplus to deficit came from other factors, most prominently from what the Congressional Budget Office calls “technical” and “economic” change: the government simply collected less revenue during the bust than analysts had anticipated. Wealthy people pay most of the income taxes in America. And their taxable incomes are extremely sensitive to the performance of the stock market—not surprising, considering how many wealthy people either work in finance, or receive compensation in the form of stock options.

For decades, pundits have been warning that a time would come when Social Security would start to become a drain on the federal budget. Now it’s happening. In 2010, for the first time, payouts to retirees and the disabled have exceeded the program’s revenues from payroll taxes. Infusions from the general fund are now needed if the government is to keep mailing checks—a situation that is projected to become a permanent, and growing, problem by 2016.

That means that Social Security, too, is exposed to the performance of the stock market. Unfortunately, unlike the holders of 401(k) accounts, the beneficiaries are not aware of this, which means that they will not, for example, delay retirement until the market recovers. (In fact, Social Security is thought to cause older Americans to retire before they otherwise would.)

Whether Americans know it or not, they have spent decades basing their retirement plans on expectations of big capital gains in their houses and stock portfolios. But no system can completely protect us from the problem of lower asset returns. Schrager suggests that unless we suddenly become willing to save a huge chunk of our income every year, we may need to rethink our retirement plans. “I don’t know if it’s ever going to be realistic that everyone saves enough to spend the last third of their life on vacation,” she says.

That’s all right for economists and journalists, who can probably spend a good bit of their golden years at a desk, typing. But is that realistic, or appealing, for people with less cerebral jobs? Realistic or not, it may be the future for all of us.

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Writing used to be a solitary profession. How did it become so interminably social?

Whether we’re behind the podium or awaiting our turn, numbing our bottoms on the chill of metal foldout chairs or trying to work some life into our terror-stricken tongues, we introverts feel the pain of the public performance. This is because there are requirements to being a writer. Other than being a writer, I mean. Firstly, there’s the need to become part of the writing “community”, which compels every writer who craves self respect and success to attend community events, help to organize them, buzz over them, and—despite blitzed nerves and staggering bowels—present and perform at them. We get through it. We bully ourselves into it. We dose ourselves with beta blockers. We drink. We become our own worst enemies for a night of validation and participation.

Even when a dentist kills an adored lion, and everyone is furious, there’s loftier righteousness to be had.

Now is the point in the story of Cecil the lion—amid non-stop news coverage and passionate social-media advocacy—when people get tired of hearing about Cecil the lion. Even if they hesitate to say it.

But Cecil fatigue is only going to get worse. On Friday morning, Zimbabwe’s environment minister, Oppah Muchinguri, called for the extradition of the man who killed him, the Minnesota dentist Walter Palmer. Muchinguri would like Palmer to be “held accountable for his illegal action”—paying a reported $50,000 to kill Cecil with an arrow after luring him away from protected land. And she’s far from alone in demanding accountability. This week, the Internet has served as a bastion of judgment and vigilante justice—just like usual, except that this was a perfect storm directed at a single person. It might be called an outrage singularity.

Forget credit hours—in a quest to cut costs, universities are simply asking students to prove their mastery of a subject.

MANCHESTER, Mich.—Had Daniella Kippnick followed in the footsteps of the hundreds of millions of students who have earned university degrees in the past millennium, she might be slumping in a lecture hall somewhere while a professor droned. But Kippnick has no course lectures. She has no courses to attend at all. No classroom, no college quad, no grades. Her university has no deadlines or tenure-track professors.

Instead, Kippnick makes her way through different subject matters on the way to a bachelor’s in accounting. When she feels she’s mastered a certain subject, she takes a test at home, where a proctor watches her from afar by monitoring her computer and watching her over a video feed. If she proves she’s competent—by getting the equivalent of a B—she passes and moves on to the next subject.

The Wall Street Journal’s eyebrow-raising story of how the presidential candidate and her husband accepted cash from UBS without any regard for the appearance of impropriety that it created.

The Swiss bank UBS is one of the biggest, most powerful financial institutions in the world. As secretary of state, Hillary Clinton intervened to help it out with the IRS. And after that, the Swiss bank paid Bill Clinton $1.5 million for speaking gigs. TheWall Street Journal reported all that and more Thursday in an article that highlights huge conflicts of interest that the Clintons have created in the recent past.

The piece begins by detailing how Clinton helped the global bank.

“A few weeks after Hillary Clinton was sworn in as secretary of state in early 2009, she was summoned to Geneva by her Swiss counterpart to discuss an urgent matter. The Internal Revenue Service was suing UBS AG to get the identities of Americans with secret accounts,” the newspaper reports. “If the case proceeded, Switzerland’s largest bank would face an impossible choice: Violate Swiss secrecy laws by handing over the names, or refuse and face criminal charges in U.S. federal court. Within months, Mrs. Clinton announced a tentative legal settlement—an unusual intervention by the top U.S. diplomat. UBS ultimately turned over information on 4,450 accounts, a fraction of the 52,000 sought by the IRS.”

There’s no way this man could be president, right? Just look at him: rumpled and scowling, bald pate topped by an entropic nimbus of white hair. Just listen to him: ranting, in his gravelly Brooklyn accent, about socialism. Socialism!

And yet here we are: In the biggest surprise of the race for the Democratic presidential nomination, this thoroughly implausible man, Bernie Sanders, is a sensation.

He is drawing enormous crowds—11,000 in Phoenix, 8,000 in Dallas, 2,500 in Council Bluffs, Iowa—the largest turnout of any candidate from any party in the first-to-vote primary state. He has raised $15 million in mostly small donations, to Hillary Clinton’s $45 million—and unlike her, he did it without holding a single fundraiser. Shocking the political establishment, it is Sanders—not Martin O’Malley, the fresh-faced former two-term governor of Maryland; not Joe Biden, the sitting vice president—to whom discontented Democratic voters looking for an alternative to Clinton have turned.

During the multi-country press tour for Mission Impossible: Rogue Nation, not even Jon Stewart has dared ask Tom Cruise about Scientology.

During the media blitz for Mission Impossible: Rogue Nation over the past two weeks, Tom Cruise has seemingly been everywhere. In London, he participated in a live interview at the British Film Institute with the presenter Alex Zane, the movie’s director, Christopher McQuarrie, and a handful of his fellow cast members. In New York, he faced off with Jimmy Fallon in a lip-sync battle on The Tonight Show and attended the Monday night premiere in Times Square. And, on Tuesday afternoon, the actor recorded an appearance on The Daily Show With Jon Stewart, where he discussed his exercise regimen, the importance of a healthy diet, and how he still has all his own hair at 53.

Stewart, who during his career has won two Peabody Awards for public service and the Orwell Award for “distinguished contribution to honesty and clarity in public language,” represented the most challenging interviewer Cruise has faced on the tour, during a challenging year for the actor. In April, HBO broadcast Alex Gibney’s documentary Going Clear, a film based on the book of the same title by Lawrence Wright exploring the Church of Scientology, of which Cruise is a high-profile member. The movie alleges, among other things, that the actor personally profited from slave labor (church members who were paid 40 cents an hour to outfit the star’s airplane hangar and motorcycle), and that his former girlfriend, the actress Nazanin Boniadi, was punished by the Church by being forced to do menial work after telling a friend about her relationship troubles with Cruise. For Cruise “not to address the allegations of abuse,” Gibney said in January, “seems to me palpably irresponsible.” But in The Daily Show interview, as with all of Cruise’s other appearances, Scientology wasn’t mentioned.

An attack on an American-funded military group epitomizes the Obama Administration’s logistical and strategic failures in the war-torn country.

Last week, the U.S. finally received some good news in Syria:.After months of prevarication, Turkey announced that the American military could launch airstrikes against Islamic State positions in Syria from its base in Incirlik. The development signaled that Turkey, a regional power, had at last agreed to join the fight against ISIS.

The announcement provided a dose of optimism in a conflict that has, in the last four years, killed over 200,000 and displaced millions more. Days later, however, the positive momentum screeched to a halt. Earlier this week, fighters from the al-Nusra Front, an Islamist group aligned with al-Qaeda, reportedly captured the commander of Division 30, a Syrian militia that receives U.S. funding and logistical support, in the countryside north of Aleppo. On Friday, the offensive escalated: Al-Nusra fighters attacked Division 30 headquarters, killing five and capturing others. According to Agence France Presse, the purpose of the attack was to obtain sophisticated weapons provided by the Americans.

The Islamic State is no mere collection of psychopaths. It is a religious group with carefully considered beliefs, among them that it is a key agent of the coming apocalypse. Here’s what that means for its strategy—and for how to stop it.

What is the Islamic State?

Where did it come from, and what are its intentions? The simplicity of these questions can be deceiving, and few Western leaders seem to know the answers. In December, The New York Times published confidential comments by Major General Michael K. Nagata, the Special Operations commander for the United States in the Middle East, admitting that he had hardly begun figuring out the Islamic State’s appeal. “We have not defeated the idea,” he said. “We do not even understand the idea.” In the past year, President Obama has referred to the Islamic State, variously, as “not Islamic” and as al-Qaeda’s “jayvee team,” statements that reflected confusion about the group, and may have contributed to significant strategic errors.

Some say the so-called sharing economy has gotten away from its central premise—sharing.

This past March, in an up-and-coming neighborhood of Portland, Maine, a group of residents rented a warehouse and opened a tool-lending library. The idea was to give locals access to everyday but expensive garage, kitchen, and landscaping tools—such as chainsaws, lawnmowers, wheelbarrows, a giant cider press, and soap molds—to save unnecessary expense as well as clutter in closets and tool sheds.

The residents had been inspired by similar tool-lending libraries across the country—in Columbus, Ohio; in Seattle, Washington; in Portland, Oregon. The ethos made sense to the Mainers. “We all have day jobs working to make a more sustainable world,” says Hazel Onsrud, one of the Maine Tool Library’s founders, who works in renewable energy. “I do not want to buy all of that stuff.”

A controversial treatment shows promise, especially for victims of trauma.

It’s straight out of a cartoon about hypnosis: A black-cloaked charlatan swings a pendulum in front of a patient, who dutifully watches and ping-pongs his eyes in turn. (This might be chased with the intonation, “You are getting sleeeeeepy...”)

Unlike most stereotypical images of mind alteration—“Psychiatric help, 5 cents” anyone?—this one is real. An obscure type of therapy known as EMDR, or Eye Movement Desensitization and Reprocessing, is gaining ground as a potential treatment for people who have experienced severe forms of trauma.

Here’s the idea: The person is told to focus on the troubling image or negative thought while simultaneously moving his or her eyes back and forth. To prompt this, the therapist might move his fingers from side to side, or he might use a tapping or waving of a wand. The patient is told to let her mind go blank and notice whatever sensations might come to mind. These steps are repeated throughout the session.